What Is The 2017 FHA Minimum Credit Score Requirements
This BLOG On What Is The 2017 FHA Minimum Credit Score Requirements Was Written By Gustan Cho
One of the most common questions I have been getting recently from my viewers is what are the 2017 FHA Minimum Credit Score Requirements to qualify for a FHA Loan with 3.5% down payment. Many folks who contact me are often confused because they get different answers when they consult with loan officers at other banks and lenders as to the question when they ask what the 2017 FHA Minimum Credit Score Requirements are. Unfortunately, many loan officers only tell borrowers what the 2017 FHA Minimum Credit Score Requirements are from their lending institution and NOT what the actual credit score requirements are per FHA Guidelines On Credit Scores . Some loan officers tell borrowers that the minimum credit score requirements are 640 while others tell them it is 620. These loan officers are actually telling borrowers that the 640 FICO Credit Scores, or 620 FICO Credit Scores are the FHA Minimum Credit Score Requirements of the bank or mortgage company they represent and NOT the actual Credit Scores Required by FHA. The credit scores they are stating are that particular mortgage lender’s FHA Lender Overlays On Credit Scores and NOT HUD’s 2017 FHA Minimum Credit Score Requirements. HUD, the United States Department of Housing and Urban Development, is the parent of the FHA, The Federal Housing Administration and FHA is the entity that sets the 2017 FHA Minimum Credit Score Requirements. Here is the 2017 FHA Minimum Credit Score Requirements:
- If a borrower has a credit score of at least a 580 FICO Credit Score, the borrower can qualify for a FHA Loan with 3.5% down payment but the maximum debt to income ratio allowed is 43% DTI for them to get an approve/eligible per Automated Underwriting System
- If a borrower has a credit score of at least a 620 FICO Credit Score, the borrower can qualify for a FHA Loan with a 3.5% down payment but the maximum debt to income ratio can go as high as 56.9% DTI on the back end and the maximum front end debt to income ratio can go as high as 46.9% DTI to get an approve/eligible per Automated Underwriting System
- A borrower with credit scores of under 580 FICO Credit Scores can qualify for a FHA Loan with 10% down payment and compensating factors
2017 FHA Minimum Credit Score Requirements On FHA Loans
The HUD 4000.1 FHA Handbook is the latest FHA Guidelines that FHA Lenders need to follow in order for all of their FHA Loans they originate and fund to be insurable. Changes in FHA Guidelines do happen with little to no notice due to changes in mortgage requirements because of legislation and regulations. These changes can happen often and lenders and consumers need to be aware of these changes. FHA Guidelines that were effective a year ago may no longer be good today. 2017 FHA Minimum Credit Score Requirements on FHA Loans that require 3.5% down payment is set at 580 Credit Score. Borrowers with credit scores between 500 FICO and 579 FICO Credit Scores can qualify for FHA Loans, however, these borrowers are limited to 90% LTV, Loan To Value, FHA Loans which means 10% down payment is required. Any borrower with under 500 FICO Credit Scores are not eligible for a FHA insured mortgage loan until they can get their credit scores to a 500 FICO Minimum. Again, anyone with credit scores of under 580 FICO credit scores, 10% down payment is required. Although FHA states that borrowers with under 580 FICO credit scores and 10% down payment are eligible for FHA Loans, I have never originated and funded any FHA Loan with borrowers under 580 FICO Credit Scores. It is my advice if your credit scores are under 580 FICO, it is best to get it boosted to at least a 580 FICO credit score and apply once your credit scores are at least 580 FICO.
Advice In Raising Your Credit Scores To Qualify For FHA Loans
You can qualify for a FHA Loan with low credit scores. As mentioned above, it is best to try to raise your credit scores to at least a 580 FICO Credit Score and then apply for a FHA instead of trying to get a pre-approval with under a 580 FICO Credit Score. Many folks do not realize how easy and streamlined it can be in trying to raise your credit score. Here are some quick tips on boosting your credit scores so you can qualify for a mortgage:
- If you have no revolving credit tradelines, just getting one to three secured credit cards with at least a $500 credit limit can boost your credit scores. One secured credit card can boost your credit scores by at least 20 or more FICO Points
- If you have a family member who lives with you at the same address or a family member with the same last name, if the family member can add you on as an authorized user to their credit card, that is automatically a seasoned credit tradelines. However, the main card holder had to have had perfect payment history with no late payment and a very low credit utilization ratio which means a credit card balance of 10% of the available credit limit
- FHA exempts credit disputes on medical collection accounts. If you have recent medical collection accounts, dispute them. Whenever you do a credit dispute, the credit bureaus will take that derogatory credit item from the FICO credit scoring model so it is like not having that derogatory credit item. Therefore, it will boost your credit scores. However, this technique needs to be timed properly and is only good for a short term band aid and remedy and not long term solution
If you are getting the runaround from other lenders that you do not qualify for a FHA Loan because you have credit scores under 620 FICO, please contact Gustan Cho at 262-716-8151 or email Gustan Cho at firstname.lastname@example.org.